Finance & Tax
ROI Calculator
Calculate return on investment and CAGR
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Enter the holding period in years to compute annualised ROI (CAGR).
Profit / loss
ROI
Multiple
Annualised ROI (CAGR)
CAGR is the apples-to-apples figure when comparing investments with different durations.
How does it work?
Return on investment (ROI) measures how much money you made (or lost) on an investment relative to the amount invested. It's expressed as a percentage and is the most widely-used single metric for comparing investments.
Simple ROI formula
Take the gain (or loss) divided by the original investment, expressed as a percentage:
ROI = (Final value − Initial investment) ÷ Initial investment × 100
Annualised ROI (CAGR)
Simple ROI doesn't account for time. A 50% return over 1 year is better than 50% over 10 years. CAGR (Compound Annual Growth Rate) is the rate that, compounded annually, gets you from the initial investment to the final value:
CAGR = (Final ÷ Initial)^(1/years) − 1
Worked example
Invest 10,000 SAR; the investment is worth 15,000 SAR after 5 years.
- Gain = 15,000 − 10,000 = 5,000 SAR
- Simple ROI = 5,000 / 10,000 × 100 = 50%
- Multiple = 15,000 / 10,000 = 1.5×
- CAGR = (1.5)^(1/5) − 1 ≈ 8.45% per year
Comparing investments
- Always compare CAGR (annualised) rather than simple ROI when durations differ.
- ROI doesn't account for risk — a 30% return on a risky asset isn't equivalent to 30% on a safe one.
- For partial-year holdings, CAGR still applies — use the year as a fractional duration.
- Negative ROI means you lost money; -100% means the investment was a total write-off.
Frequently Asked Questions
What is a good ROI?
It depends on the asset class. Saudi index returns average ~7-9% per year long-term. Real estate varies by city and yield. ROI must be compared to risk-free rates and inflation to judge whether it's 'good'.
What is the difference between ROI and CAGR?
ROI is the total percentage return over the entire holding period. CAGR is the equivalent annual return — the rate that, compounded yearly, would produce the same final value. Always use CAGR to compare investments with different durations.
Can ROI be negative?
Yes — a negative ROI means the investment lost value. -100% means total loss (final value zero).
Why is CAGR null when final value is zero or negative?
CAGR uses a fractional power of (final ÷ initial). When final value is ≤ 0, that operation is mathematically undefined for real numbers. The calculator returns null instead.
Does ROI account for taxes, fees, or inflation?
No — this is gross ROI. Subtract capital-gains tax, brokerage fees, and inflation manually to get the real net return.
Is a higher multiple always better than a higher ROI?
Multiple and ROI describe the same thing differently. ROI 100% = multiple 2×. They convey identical information; use whichever your audience finds clearer.
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